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Budget: Tax credits cut for families

Tax credits will be cut for families earning more than £40,000 it was announced in yesterday's (June 22nd) Budget.

However, lower income families who earn below this amount will expect their tax credits to increase by around £150 from April 2011.

Commenting on the measures, Jasmine Birtles, founder of Moneymagpie.com, said: "Really a household that is earning over £40,000 should be able to cope on its own."

Households will also benefit from an increase in the income tax threshold, which will rise by £1,000 to £7,475.

Ms Birtles commented: "That should particularly help those who are actually in work, because one of the big complaints during the last administration was that working-class people who were working felt that they had been neglected by the government."

But Ms Birtles suggested that this could be offset by the rise in VAT, which the chancellor revealed would rise to 20 per cent from January, and the freezing of child benefits.

Child benefits will be frozen for three years and the Sure Start maternity grant will be given to the first child only.